SEOUL (Reuters) - The biggest shareholder in South Korean oil refiner Hyundai Oilbank said on Monday that state-owned Saudi Aramco had agreed to buy a 17 percent stake in its oil processing operations for 1.4 trillion won (£943 million/$1.2 billion).
Hyundai Heavy Industries Holdings said in a regulatory filing that it had signed a sales agreement with Saudi Aramco that included an option for Aramco to buy an additional 2.9 percent stake in Hyundai Oilbank.
The agreement, reached with an Aramco subsidiary, Aramco Overseas Co B.V (AOC), will support the mother company’s crude oil placement strategy by providing a dedicated outlet for Arabian crude oil to South Korea, Aramco said in a statement.
In late January, Hyundai Heavy said Aramco planned to invest up to $1.6 billion for as much as 19.9 percent of the South Korean refiner to expand its foothold in the country.
Aramco bought the stake in the unlisted refiner for 33,000 won per share, which is slightly lower than its initially planned price, reflecting market conditions, said an official at Hyundai Heavy who provided no further details.
The investment is meant to support Aramco’s broader downstream growth strategy and provide long-term crude oil options and offtakes as part of the company’s trading business, Abdulaziz Al-Judaimi, Aramco’s senior vice president of downstream, said in the statement.
Hyundai Heavy has said it plans to “reconsider” listing its refinery arm after completing the stake sale.
The Hyundai Heavy official said the company would take its time in deciding whether to go ahead with its refining arm’s public listing, without setting a timeframe.
Hyundai Oilbank, South Korea’s smallest refiner by capacity, has a total of 650,000 barrels per day of refining capacity in the southwestern city of Daesan and aims to expand its petrochemical business.
Reporting by Ju-min Park, Jane Chung and Dahlia Nehme; Editing by Christian Schmollinger and Dale Hudson